Two years ago the Government launched the first phase of it’s "Help to Buy" scheme, which has now seen more than 80,000 borrowers purchase a home.
Through the first phase of Help to Buy, (let’s call it H2B1), the Government provides an equity loan worth up to 20 per cent of the value of a new build home, interest free for the first 5 years, which can be repaid at any time or when the home is sold, with the borrower putting up a 5 per cent deposit.
Although this scheme helped a lot of borrowers, I can’t help but think that it helped a lot of House Builders too along with the Government who were well behind their "new build target."
Help to Buy 2 followed, which basically plugged a gap which had been created after the credit crunch. Lenders were all targeting mortgage holders with lots of equity and big deposits, which left mortgages for first time buyers with smaller deposits, in short supply.
It was only right that the Government stepped in to help out, as it was they who had put the brakes on the high % lending. Gradually the market started to normalise and more high loan-to-value lending returned which in turn led to a healthy mortgage market.
H2B2 was simple. Lenders offered 95% loans, and the Government insured the lenders. Even those lenders who don’t participate in the scheme have cottoned on to the fact that the market needs more affordable options for those climbing onto the property ladder for the first time. However, the Help to Buy mortgage guarantee scheme still accounts for a sizeable chunk of 95 per cent products currently available on the market. It will be interesting to see what schemes are left once the scheme is wound down next year.
Lenders have changed their attitude to mortgages over the past few years, focusing on affordability and sensible lending. Hopefully they will be confident enough to underwrite their own 95% loans once the Government withdraw!
For more information see our Help to Buy Mortgages or speak to a mortgage adviser now on 01628 507477.
Recent posts
When will mortgage rates fall further?
Yesterday
Analysts are predicting further rate cuts this year, with the next one possibly coming down to 4% when the Bank of England’s Monetary Policy Committee meet on Thursday 7th August 2025.
The Financial Conduct Authority (FCA) has shared new changes to mortgage rules with the aim to simplify remortgaging, and encourage competition within the mortgage market.
Lloyds boost lending for first-time buyers
8 days ago
Lloyds Banking Group has jumped on the bandwagon to boost lending for first-time buyers as they allocate an additional £4 billion to help first-time buyers on to the property ladder.
As the Loan to Income (LTI) cap has been increased to 5.5 times income, applicants who fit the First Time Buyer Boost criteria could borrow up to 22% more.
The government is introducing mortgage reforms to boost homeownership, stimulate economic growth, and make the housing market more accessible, especially for first-time buyers.
Chancellor Rachel Reeves has announced the most significant mortgage reforms in over a decade—great news for those dreaming of homeownership.
Nationwide ease criteria for first-time buyers
11 days ago
Nationwide ease their ‘Helping Hand’ mortgage designed to help first-time buyers get onto the property ladder by allowing them to borrow up to six times their income.
Ways to save money over the summer holiday
17 days ago
Keeping the kids entertained over the six-week summer holidays isn’t always easy, especially with the cost-of-living making it even more difficult. Below is a list of fun, inexpensive ideas to do over the break
The Financial Conduct Authority (FCA) has published a discussion paper about the future of the mortgage market in a bid to improve access for first -time buyers, self-employed, and those borrowing in retirement.
Ever wondered where the most reasonably-priced towns for families to buy are? Property company, Zoopla has identified the top 10 towns for families to live in the UK by looking at the most affordable towns, and how many people are looking in that area.
More information
Trusted by
